What Getting Fired Teaches You About Hiring

CrowdFlower Founder and CEO, Lukas Biewald, believes in the power of data. That’s why, after being fired by his own board in 2012, he decided to come back and help build CrowdFlower into the crowdsourcing world leader it has become. This week, Biewald talked with FounderDating about coming back to his company after the falling out, positive and productive ways to communicate with boards, and where you should be applying data science to your company—but probably aren’t.

You’ve been open about your removal from Crowdflower and that when it originally happened it surprised you. In retrospect, were there signs?

It’s similar to being fired from any role; there are always signs in retrospect. The board probably could have done a better job of communicating feedback fairly; but at the same time, I could have done a better job of drawing out that feedback. If I could go back, I would manage my board more actively. For example, one thing I do now is give the board 15 minutes to talk without any management present, including me, before board meetings. It gives them more space. Then I come in after that and ask them questions about how the business is doing, and what we should focus on. Communication is a two-way street and I certainly have employees that are easier and harder to give feedback to, so I try to be a CEO who’s easy to give feedback to.

Given that experience, what advice would you give entrepreneurs about having more effective relationships with their board?

FOCUS ON THE FUTURE: One wise thing is to keep the board meeting looking forward as much as possible. A bad pattern first-time entrepreneurs fall into is making the board meetings backward-looking, because looking backwards is more comfortable as you have more data. Looking forward is where you can actually change something, and the board is much more helpful for that than nitpicking your past decisions.

They’re much happier and more helpful thinking about the big strategic choices that can make the future better. Tweet this

BE INTENTIONAL WITH COMMUNICATION: One way to make sure forward-thinking happens in a board meeting is to send out materials early. A lot of entrepreneurs procrastinate on that and get them out the last minute. The board doesn’t really care if your data points are totally up to date; just give them the info so they have time to digest it. Another trick I learned from another CEO is to write a letter to the board before the board meeting that’s not super metric heavy. Say the important things that have happened for the business, so you can get deeper into important matters at the meeting.

Do you think young entrepreneurs are too worried about equity and dilution? Or not concerned enough?

The most pervasive myth that I see among early-stage entrepreneurs is that there’s something sort of magical about 51% equity, or they don’t want to go below 50%. I think that’s really misguided. Tweet this

If you’re running a business for a good long time, you’re going to be doing lots of things that change everybody’s amounts of equity.

If you have a well-known investor who’s unhappy, it doesn’t matter if they own one percent of the company, you’re gonna have a really hard time getting followup investments. And the actual dynamics of board meetings matter a lot. An independent board member might have a tiny amount of equity but a ton of voice in where the business goes.

The composition of your board matters a lot more than you think it does, and equity matters a lot less. Tweet this

When you do your first equity deal, the equity is really visible to you and people sort of see it like a scorecard on how well they’re doing and how the business is doing—that’s a mistake.

They get to the point of wanting to make somebody an offer, and then check references just for glaring red flags so they can check the box. That’s totally the wrong way to do reference checking. Tweet this

And every year I get a little more extreme about that. If someone’s been in the workforce even a couple of years, you can learn so much more from talking to someone who worked with them. I like to go find someone who worked with the candidate and get a meeting in person to sit down with them. It’s a ton of work but a lot of the mistake hires I’ve made, I’ll come across someone later they’ll tell me that person was trouble at other places. You could save yourself so much crap. It makes the hiring process more time consuming, but everything else much more successful.

The other thing is to check references with an open mind. I was reference checking with this one exec I was hiring recently, and the first person I met with said “I can tell you’ve already decided you want to hire him.” I realized I needed to back up and have a bit more zen-like approach to this process, because he was totally right I really did want to hire him in the interview. Also you can look at somebody’s resume with a critical eye and get a good instinct of where the issues might be and where you want to dig.

What’s the most crucial place to be using data analysis where you see lots of entrepreneurs not using it?

Two main areas: 1) Hiring data – I really do think that companies should be more data-driven in their hiring process. People have such strong opinions about their particular hiring methodology or the questions they ask, but they rarely go back and check if their assumptions are true. People say the most important thing is hiring, the culture, and the team. And they’ll often say “I’m all about data,” or “I’m so data-driven.” If those two things are true, why don’t you apply some data to your hiring process?

Even if you just have 15 hires, why not just write some things down. You’ll see patterns pretty quickly. You have information, so you can go back, analyze and look for patterns. You don’t have to graph a whole thing out to learn something about what’s working and what’s not, you just have to sit down and think about it and look at the data.

2) Individual incentives – You wouldn’t need this with a three-person company, but more like a 50 person company—is giving people really fair incentives and measuring their performance in a clear way. A lot of companies don’t do this well enough. People want some autonomy, to be allowed to do their work in whatever way they choose, and then be held accountable in a fair and objective way. When you’re a really tiny company and everybody’s living or dying together, it’s obvious what the metrics are. But when people start to specialize, you want to have objectives and measures for them. So just because someone doesn’t show up for beers every night with the team, they don’t get penalized because they’re still doing their job really well.